In FY 2009, we studied pathogenesis mechanisms of hospital- and community-associated methicillin-resistant Staphylococcus aureus (MRSA). In a first major study (Li et al., PNAS 2009), we looked at the evolution of virulence in community-associated MRSA. Traditionally, MRSA infections occurred exclusively in hospitals and were limited to immunocompromised patients or individuals with predisposing risk factors. However, recently there has been an alarming epidemic caused by community-associated (CA)-MRSA strains, which can cause severe infections that can result in necrotizing fasciitis or even death in otherwise healthy adults outside of healthcare settings. In the US, CA-MRSA is now the cause of the majority of infections reporting to the emergency room. It is unclear what makes CA-MRSA strains more successful in causing human disease compared with their hospital-associated counterparts. Previously, we found a class of secreted staphylococcal peptides that have a remarkable ability to recruit, activate and subsequently lyse human neutrophils, thus eliminating the main cellular defense against S. aureus infection. These so-called PSM peptides are produced at high concentrations by standard CA-MRSA strains and contribute significantly to the ability of those strains to cause disease in animal models of infection. In contrast to many other S. aureus toxins, PSMs are encoded on the core genome, prompting us to investigate the impact of differential gene expression on virulence of the major epidemic CA-MRSA strain USA300. To gain insight into the evolution of the exceptional potential of USA300 to cause disease, we compared phylogeny and virulence of USA300 to closely related MRSA clones. We discovered that the sublineage from which USA300 evolved is characterized by a phenotype of high virulence that is clearly distinct from other MRSA. Namely, USA300 and its progenitor USA500 had high virulence in animal infection models and capacity to evade innate host defense mechanisms. Furthermore, our results indicate that increased virulence in the USA300/USA500 sublineage is due to differential expression of core genome-encoded virulence determinants such as PSMs and alpha-toxin. Notably, the fact that the virulence phenotype of USA300 was already established in its progenitor indicates that acquisition of mobile genetic elements has played a limited role in the evolution of USA300 virulence and points to a possibly different role of those elements. Thus, our results highlight the importance of differential gene expression in the evolution of USA300 virulence. This finding calls for a profound revision of our notion about CA-MRSA pathogenesis at the molecular level and has important implications for design of therapeutics directed against CA-MRSA. In a second major study (Queck et al., PLoS Pathogens 2009), we identified the first example of a staphylococcal toxin that is transferred on mobile genetic elements together with methicillin resistance. Bacterial virulence and antibiotic resistance have a significant influence on disease severity and treatment options during bacterial infections. Frequently, the underlying genetic determinants are encoded on mobile genetic elements (MGEs). In S. aureus, MGEs that contain antibiotic resistance genes commonly do not contain genes for virulence determinants. While all known PSMs are core genome-encoded, we found a previously unidentified psm gene, psm-mec, within the staphylococcal methicillin resistance-encoding MGE SCCmec. PSM-mec was strongly expressed in many strains and showed the physico-chemical, pro-inflammatory, and cytolytic characteristics typical of PSMs. Notably, in an S. aureus strain with low production of core genome-encoded PSMs, expression of PSM-mec had a significant impact on immune evasion and disease. In addition to providing high-level resistance to methicillin, acquisition of SCCmec elements encoding PSM-mec by horizontal gene transfer may therefore contribute to staphylococcal virulence by substituting for the lack of expression of core genome-encoded PSMs. Thus, our study revealed a previously unknown role of methicillin resistance clusters in staphylococcal pathogenesis and shows that important virulence and antibiotic resistance determinants may be combined in staphylococcal MGEs.